Monday, October 24, 2011
When the balance sheet of banks get too thin on cash on hand, the Federal Reserve will "shore up" the "too big to fail" balance sheets by buying up US Government assets by creating money out of thin air, then pipe that to the big banks.
Right? If it's now commonplace to print money, why would banks offer you a big percentage rate to "borrow" cash from you so they could lend to others at a slight margin.
Banking as we know it is completely a new world. Up until the invention of all of these esoteric financial games that came with derivatives and insurance hedging against their moves, it became impossible to count money as the zero sum game that it should be. When one person spends a dollar, another person gains a dollar, and the person who spent it is one dollar short.
In today's printing of money, when a big bank is short, it just prints more to cover the shortfall. In the long run, the universe of dollars becomes lopsided because the big banks can do the stupidest things without risk, knowing that they are too big to fail. These things only end in revolution (as far as the history of democracy goes) and we're in a peaceful revolution now. When does it become violent? When there are food shortages.
And that's right around the corner.
Friday, April 29, 2011
You might ask, If something is trading at $1,505 - why would somebody at 10am Eastern Standard Time sell a big block of that same thing for $1,494. Why not sell it at $1,505 like everybody else? Why "dump" it?
Like in my last post, I said what was going to happen in the futures markets - what happened yesterday is happening today. Somebody in the U.S. pulls a lever at the open of trading in NY, and dumps a bunch of Gold paper contracts at below market value. Why would the Fed do that? To control the cost of Gold. If gold goes too crazy, hyperinflation would then ignite, which would be the end of the U.S. dollar. The Fed would like inflation, but not runaway inflation.
The Fed cannot control the overseas markets - who buy while Ben Bernanke and his group of weirdos sleep. Yes they lose money on this trade, but they can simply print more behind the scenes. Why is the U.S. political world so worried about cutting funding for NPR? This is small beans compared to the trillions of phony money the U.S. Federal Reserve is creating out of nowhere, to be paid either with middle class taxpayer dollars or loss in purchasing power due to inflation.
Right after the wipeout sell, you'll see buying picks up right after that. This would be international buyers buying "on the dip". These games are so evident and transparent it makes me think that the Fed thinks everybody is just a bunch of idiots. Why are they being so blatant? Because they get away with it with impunity.
It's like the peeping Tom who decides to break in and steal a few panties from the hamper, who then, unchecked, graduates to throwing cheerleaders in a panel van. This is what the Federal Reserve does because it is unchecked.
The Federal Reserve must be stopped, but it's too powerful for this to happen. So it's going to take down the U.S. with it.
If you are one of my Facebook friends, you saw this morning what I said was going to happen on the gold market at open of the NY Futures, 9am PST. This is what I was posting (image on right). You'll see that I said at 7:35am, that in about 1.5 hours, the price of gold was going to drop at the New York opening of the Futures Market. 35 minutes after the opening bell, it dropped. Six minutes later the drop continued. Then, people who see these dips will start to buy in, and the market price should level somewhat, stripping the Fed from some cash. Lose cash did it? Well the Federal Reserve can just print some more to replace it!!!
Why does this happen? Because world markets open earlier than the US Markets. These markets dictate the world price of gold. When NY opens, the Fed dumps a bunch of paper contracts (Reserve banks still have a lot of gold holdings - we all are told to believe, but nobody is opening Fort Knox for us) just enough to trigger computerized programs to also dump. You'll see two dumps in the last chart, that is two really low sales.
Gold is a very very small market. It can be manipulated easily. If I sell a large enough order to be visible on the markets for, say, $400, then the new market price becomes $400. Right? So they do this to try to manipulate Gold prices. When NY Futures closes, and the market goes back to the world, the world goes, "oooh - bargain hunting!"
I never ever suggest trading in markets. It is a super huge time suck and really risky. But - if you did - you could make a chunk of money daily by buying and shorting based on this knowledge alone.